Global Corporate Bond Issurance and Outlook

After advancing by 33% annually in 2012 to a record $1.134 trillion, 2013’s US$-denominated investment grade (IG) bond issuance dipped by -1.5% to $1.119 trillion. Following 2012’s 48% annual surge, US$-denominated high yield bond issuance advanced by 11% to a record $431 billion in 2013. Also, after gaining 5% in 2012, newly rated high yield bank loan programs increased by 38% annually to $579 billion in 2013.

In 2014, US$-denominated bond issuance edged up by 0.7% annually for IG, to $1.127 trillion and dropped by -2.7% to $419 billion for high yield. Also, newly rated bank loan programs from high yield issuers plunged by -17% in 2014 to $480 billion, which was far under 2007’s record $661 billion.

The first quarter of 2014 showed yearly setbacks of -28.0% for US$-denominated high yield bond issuance and -0.6% for US$-denominated investment-grade (IG) corporate bond offerings. Worldwide, offerings of IG corporate bonds grew by 7% annually in Q1-2014, while the broadest measure of high yield bond issuance fell by -15%.

Q2-2014’s worldwide corporate bond issuance posted year-over-year advances of 14.9% for IG and 52.5% for high yield, wherein dollar-denominated bond offerings increased by 5.0% for IG and advanced by 31.5% for high yield. Meanwhile, Q2-2014 also showed a -16.0% yearly drop by new high yield bank loan programs.

Q3-2014’s worldwide corporate bond issuance revealed year-over-year declines of -10.6% for IG and -0.2% for high yield that included setbacks for US$-denominated issuance of -15.3% for IG and -0.9% for high yield.

Q4-2014’s worldwide corporate bond issuance showed annual percent changes of a 3.4% increase for IG and a -20.1% plunge for high yield. At the same time, US$-denominated offerings advanced by 17.4% for IG and sank by -9.2% for high yield.

The worldwide corporate bond issuance of January-February 2015 increased annually by 5% for investment-grade and by 18% for high yield. For yearlong 2015, worldwide corporate bond offerings are likely to rise by 2% annually for IG and fall by -7% for high yield.

For 2014, euro-denominated corporate bond issuance posted year-over-year gains of 17.7% for investment-grade and 50.5% for high yield.

In 2015, a growing number of bond issues and newly-rated bank loan programs will fund acquisitions and shareholder compensation. Companies will resort to acquisitions and divestitures in order to better cope with the US’s subpar recovery. To the degree companies fear significantly higher bond yields, pre-fundings will rise.

Source: Moody’s Weekly Market Outlook [19^th March 2015]